The month of May was absolutely brutal for the markets, in particular for crypto.
I have also observed the Hodlnaut team ramping up their social engagement, which is especially important in the face of the current market conditions. Do follow their Twitter account which is very useful.
We can now subscribe to the Hodlnaut’s newsletter here and one of their articles was to compile the historical rates for comparison purposes. Not bad.
During the market volatility, I have chosen to hold some of my assets with Hodlnaut and have left them untouched.
This is not the first time that I have written on Hodlnaut, so this is intended to be a mini-update.
Since I haven’t done anything with my crypto assets, what I did do .. was to ask the Hodlnaut Team some questions that I’m sure many would be curious to know the answers, because they relate to the sustainability of the platform.
Summarizing some chats and thoughts that I had with various folks (thanks!), I presented Hodlnaut with a list of 5 questions which they generously answered so that I can share them with you.
Don’t be mistaken, I was also very interested in knowing the answers to the questions myself – especially when it impacts my assets with them!
Below is the word-for-word replies that I have gotten from Hodlnaut with regards to the five questions.
1. Sustainability
Question : The crypto market is looking rather bearish at the moment. What are Hodlnaut’s plans moving forward on being sustainable in a possibly bear market?
Answer by Hodlnaut :
Hodlnaut has already put forth its risk mitigation amidst the LUNA/UST crash and also contingency plans ahead of a bearish market outlook.
To maintain sustainability moving forward, we have previously mentioned to users that rates will not be guaranteed for a long term, but instead be based dynamically where the rates will change monthly. However, there is a possibility of changing this soon as well (to a weekly approach) but we are closely monitoring the situation and still want to stay as competitive as we can.
During this ‘downtime’, it is imperative we prepare the platform and introduce new features to the platform to increase ‘stickiness’ and ‘attractiveness’ of the platform, such as fiat on-ramp, a debit card and possibly new assets and new networks.
2. Features
Question : With token swaps in place and a mobile app, are there any future roadmap items lined up that you can share with us at this point?
Answer by Hodlnaut :
As mentioned in the first point, fiat on-ramp and a debit card are features that we are very focused on at the moment and believe it will value add to the platform!
We do also have plans for new assets and networks for users to have more opportunity to earn interest on. We do have other features with potential partners that we are looking to introduce, but we cannot say much for now as it is unconfirmed.
3. Licensing
Question : Hodlnaut currently offers two digital payment tokens (DPT) services, which are (i) borrowing and lending services and (ii) Token Swap feature. Currently, MAS is only regulating Hodlnaut’s DPT Token Swap feature, and not the DPT borrowing and lending services. What is the progress like with regards to (i), which will no doubt give further confidence to new and existing users?
Answer by Hodlnaut :
With regards to this, we are working very closely with the authorities through making sure that every feature, process and framework we have on Hodlnaut complies very strictly with the regulations set forth. We cannot say for sure when we will get the full license, but we are highly confident we are on the right track towards achieving it.
Question : Independent Verification of Hodlnaut’s Crypto Assets was last done by Crowe in 2021. Now that it is 2022 and AUM is $500m, can we expect to see another verification exercise? Juntao has also previously stated how important it is to be transparent regarding the legal requirements for getting the Major Payment Institution License.
Answer by Hodlnaut :
With regards to another verification exercise, we are still working very closely with our partners to get the Financial Attestation done. There are delays in getting approvals to publish it as we need to adhere to certain restrictions on information publication.
Do be rest assured that funds are SAFU and we are working closely with our partners to get the necessary approvals, and will publish the information once we have the green light!
4. Terra
Question : For users who are not active on Twitter and might not have seen your pinned tweets, is there any update or clarification Hodlnaut wants to make regarding Terra-related rumours? Did Hodlnaut sustain any losses as a result of the Terra incident?
Answer by Hodlnaut :
To reassure users again, we would to share the official statement with your followers:
- Hodlnaut is NOT all-in on UST as one particular rumour on Reddit has mentioned. This is a false claim. Yields on USDC/USDT/DAI are generated in-kind and paid by our loans to institutions and a small amount to DeFi Protocols like Compound Finance.
- Following on the above point, Hodlnaut has risk management policies in place in case of any worst-case scenarios like the one UST is currently facing – a de-peg from $1. We have already put forth this policy and have mitigated the risk moving forward.
Hodlnaut is also required to do due diligence on networks and assets before introducing them to our clients. The crash was an unlikely event that was taken into due consideration by the Risk Team at Hodlnaut and it was unfortunate that it happened.
Due diligence includes assessing the extreme risks of a particular asset and what would be the risk mitigation strategies in place to ensure business continuity, sustainability in an effort to protect consumer interest AFTER they have been made know of the disclaimers, risk warnings and ToS on our website.
My Thoughts
Any conversation with regards to crypto inevitably revolves about how safe the platform is.
To re-iterate what I wrote in the past, Hodlnaut’s co-founder, Juntao’s once mentioned this –
“Other than offering the best rates, we are based in Singapore, and we are a full Singaporean team. Our customers and users can be assured that they can reach out to us anytime and we are fully compliant with any regulatory requirement by the Monetary Authority of Singapore (MAS).”
Despite everything that I have just written, I wish to highlight that the usual disclaimer applies – crypto is extremely volatile and users can lose their funds in extreme events like what we encountered in May. Education and awareness is very important in the space, and we are responsible for what assets we choose to buy. The fact is that Hodlnaut will not be responsible for such situations.
My concerns are simple – If I have X amount of assets on a platform today, I will always be able to withdraw X amount of assets whenever I want.
I’m actually happy to know that Hodlnaut periodically updates its rates and places sustainability for the long-term at high priority.
As such, I will be looking forward to Hodlnaut’s updates in future.
Update 14 June 2022
In light of the breaking news that Celsius has halted ALL WITHDRAWALS (see below tweet) –
It would be prudent advice to remind everyone that crypto is exceptionally volatile, especially now.
Is it worth it to keep assets on platforms to earn a few percent APR? Maybe, or maybe not.
This is exactly why I asked the questions above, specifically those on licensing and asset verification.
I have shared my experience with Hodlnaut for the past two years, and I still have assets with them today.
What that is affecting Celsius is a lot more complicated because of what they have been doing with the assets they’re holding. Often, we lack the transparency for most CeFi platforms.
If you truly feel that it is safer to keep your assets in your own private wallet (even if it is just for a few days or weeks), don’t let anyone else convince you otherwise.
Update 27 June 2022
To sat this again, the CeFi lending space is in turmoil and it can be difficult to differentiate between truth vs FUD.
It will take time for dust to settle.
It is important that you do what you feel you need to, in order to sleep well at night.
Taking a month or two on the sidelines? The amount of yield given up is a tiny price to pay.
As for me, the confidence I have will depend a lot on the questions I have asked – regarding asset verification and licensing.
Update 8 Aug 2022
After my two previous updates on this blog post, I see this today.
WTF.
Disclaimer
The information provided on this website is a reflection of my personal experience, and does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such.
This is a gentle reminder that the trading of crypto (or digital payment tokens) is highly risky and not suitable for the general public. Conduct your own due diligence and consult your financial advisor before making any investment decisions.
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At the age of 30, I am the Personal Finance Blogger who laid claim to a negative net worth of minus $25,755 – and decided to turn things around.
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